- This month, the U.S. Centers for Medicare & Medicaid Services (CMS) unveiled a slew of regulatory changes including the integration of social, environmental, and economic factors in health care and the expansion of value assessments for health care based at home
- Another rule enables Medicare enrollees to compare out-of-pocket costs for various prescription drugs in order to score a better deal
- In late December 2020, CMS also finalized regulatory revisions that will empower states, private payers, and drugmakers with new methods of entering value-based purchasing arrangements (VBPs)
WASHINGTON D.C., The United States – This month, the Centers for Medicare & Medicaid Services (CMS) unveiled a slew of regulatory changes including the integration of social, environmental, and economic factors in health care, the expansion of value assessments for home health care, and the introduction of a digital tool for Medicare enrollees to compare out-of-pocket costs for various prescription drugs.
In late December 2020, CMS also finalized regulatory revisions that will empower states, private payers, and drugmakers with new methods of entering value-based purchasing arrangements (VBPs). Below these regulations are explained.
Considering Social Determinants of Health (SDOH)
CMS on January 7, 2021 published guidance for state health officials on the importance of enacting strategies that improve beneficiary health outcomes, minimize health disparities and reduce the costs of Medicaid and the Children’s Health Insurance Program (CHIP).
Specifically, the strategies for Medicaid tackle social determinants of health (SDOH), which encompass social, environmental, and economic factors that can strongly impact an individual’s health.
“The evidence is clear: social determinants of health, such as access to stable housing or gainful employment, may not be strictly medical, but they nevertheless have a profound impact on people’s wellbeing,” said CMS Administrator Seema Verma.
Studies have shown that these factors can worsen an individual’s health, leading to more expensive health care, thus reinforcing disparities in health across the disabled, the elderly, pregnant women, young people, those with mental health disorders or substance abuse disorders, and residents of rural areas. The COVID-19 pandemic is causing an additional disproportionate impact on these groups.
The SDOH guidance explores how state Medicaid and CHIP programs can boost beneficiary outcomes through various approaches to delivery, benefits, and methods of reimbursement. Certain services can be designed to fit the specific priorities of a state. Additionally, the guidance covers housing-related and educational services, non-medical transportation, home-delivered meals, and employment assistance.
Home Health Value-Based Purchasing (HHVBP) Model Expansion
The following day, CMS announced that it certified expansion of the Home Health Value-Based Purchasing (HHVBP) Model starting in 2022. Already enacted in nine states, the model has boosted the quality scores of home health agencies by 4.6% and saved Medicare an average of $141 million annually.
“The Coronavirus pandemic has tragically illustrated how important it is for elderly Americans to have a robust set of options outside of nursing homes,” commented Verma.
Originally introduced in 2016, the gist of the HHVBP Model is to improve the quality of home health services through payment incentives. Quality performance measures of an agency are compared to those of other home health services in the same state.
States in which all Medicare-certified HHAs participate in the model include Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and Washington.
A report evaluating the model’s performance from 2016 through 2018 demonstrated that it did in fact improve quality of care without introducing significant provider burden or adverse effects on patient access, paving the way for its future expansion.
Further, the report demonstrated improvement in functional status for home health patients, and observed reductions in unplanned acute care hospitalizations and skilled nursing facility (SNF) visits, resulting in reductions in inpatient and SNF spending, partially offset by an increase in annual emergency department (ED) spending.
Medicare Advantage and Part D Prescription Drug Program Modernization
CMS finalized, this month, changes to Medicare Advantage and Part D prescription drug programs starting in 2022. Cost-sharing for enrollees is expected to fall for certain expensive drugs. The rule will allow individuals who are enrolled to compare out-of-pocket costs for various prescription drugs through a digital tool.
The federal government hopes to save over $75 million over the next decade, as a result of these revisions.
The rules follow a CMS requirement that went into effect January 1, 2021, launching employment of a prescriber real-time drug benefit tool for Part D plans. Congress also recently mandated prescriber real-time benefit tools in the Consolidated Appropriations Act, 2021 (Public Law No. 116-260).
The new rule will introduce on formularies a second, “preferred” specialty tier with a lower cost-sharing level than a standard specialty tier, enabling Part D plans to negotiate better drug prices with manufacturers.
Moreover, Part D plans must now disclose pharmacy performance measures to CMS, and CMS will be able to publicly release this information to foster transparency and facilitate a better understanding of the impact of its measures, particularly on pharmacy reimbursements.
Medicaid Prescription Drug Purchasing & Payment Models
In late December 2020, CMS finalized regulatory revisions that will empower states, private payers, and drugmakers through new avenues to entering value-based purchasing arrangements (VBPs).
“Rules on prescription drug rebates and related reporting requirements have not been updated in thirty years, and are thwarting innovative payment models in the private sector,” explained Verma.
Specifically, the new regulations allow payers to negotiate prices with drugmakers for gene-therapies based upon outcomes and evidence-based measures like reduced hospitalizations, lab visits, and physician office visits.
Manufacturers can also report a handful of best prices instead of a single best price when presenting VBP arrangements to states, allowing for more effective experimentation with value-based arrangements. This rule may come to fruition as soon as March 2021.
It is expected that federal and state governments will save $228 million through the year 2025, as a result of these new regulations.
Some critics, however, worry that the best price regulation will remove guaranteed best price discounts which make prescription drugs affordable to Medicaid beneficiaries. Forbes also warned that value-based contracts don’t guarantee a decline in drug prices because they simply aim to align price and value.
Additionally, new programs have been introduced to assist in opioid utilization and addiction recovery and help states identify the inappropriate prescribing of opioids to at-risk patients.
Further new policies clarify the definition of line extension drugs may result in savings of $2.3 billion in the form of additional manufacturer rebates to states, through the year 2025.
The new rules also crack down on instances where prescription drug discounts do not benefit the patient and instead cut costs for health insurance companies and their pharmacy benefit managers (PBMs).
Such instances must be recorded in the drugmaker’s reporting to CMS for Medicaid rebate purposes. This particular rule, however, will not go into effect until January 1, 2023, in order to give manufacturers and payers time to prepare.
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